Kerm / Forecasts
Your post struck a familiar cord. I don't remember seeing a $10.00 forecast, if I did, I dismissed it like you. The El Nino thing started a couple of years ago and at that time anything abnormal in the climate was being blamed on this El Nino. It wasn't until last year sometime that I saw some NASA imagery and got some explanation to the cause and effect. Even with that insight, I did not appreciate the full effect it would have. I am now a believer. With the warm pacific water moving back to the Asian side, there will be an over shoot of cool water replacing it. "La Nina." The climatologist say that this will have a chilling effect over much of North America starting sometime around February. They were so right with El Nino, I have to believe they will be close with the La Nina forecast.
At the present time we are suppose to be still under the effect of El Nino. Hard to believe with this cold arctic air pushing down over most of the mid west. This Arctic air mass is something like 15 deg. colder than normal for this time of year. Being so dense, it will take a lot to move it back.
The future traders don't seem to agree with me, as a few days of warmer weather is still forecast, but in the near term, I am real bullish on natural gas stocks. The pipelines are looking for supplies and the stuff is hard to import from offshore.
There are a couple of other things happening. There is a rise in media articles appearing concerning the cold weather and natural gas. There is increased activity on this thread. It would seem sentiment is a changing.
Something I don't understand is that natural gas heavy companies stock prices are near yearly lows. (AXL-TSE, EEE-TSE, PNT-TSE to name a few) Analysis have been leaning toward gassy companies for sometime. My first thoughts were that the oil side was hurting them, but even Prize Energy (PZI - ASE) which has next to no expenses and practically 100% gas was off almost 10% today. Is this because commodities in general are getting beat up?
I'm not sure what to make of oil. At the start of the 1998, we were hearing forecasts of $18.00 oil. Now it seems that $14.00 is the working number for 1999. The trend is always lower and growth figures for the G7 countries are lower. There needs to be increased demand somewhere for oil prices to recover. The only control on the supply side will the price falling to near the cost of production. We are only a few bucks from that.
As you can see, I'm not bullish on oils at all. I agree with you whole heartily, - only pick companies with strong balance sheets and can see their way through the next year or so.
Enough, I'll get off my soapbox. Keep the firewood dry.
Take care,
Al
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